UGE Nearing Completion of Series of Transactions to Strengthen Balance Sheet and Announces Termination of Equity Offering
Transactions Result in $5.25 million Decrease in Liabilities, including $2.6 million Decrease in Current Liabilities, and Lower Annual Interest Payments by $0.4 million
Toronto, Ontario--(Newsfile Corp. - October 1, 2018) - UGE International Ltd. (TSXV: UGE) (the "Company" or "UGE"), a leader in renewable energy solutions for the commercial and industrial sector, is pleased to announce it is nearing completion of a series of transactions designed to strengthen its financial position. All amounts are expressed in US dollars, unless otherwise noted.
As of September 28, 2018, seven of eight transactions have received approval by the TSX Venture Exchange (the "Exchange"); the remaining transaction has received conditional approval, pending satisfactory review by the Exchange.
Summary of Transactions
The series of transactions includes three loans and five accounts payable balances being converted to common shares of UGE. All conversions are being completed at a price of CAD$0.25 per share. Where applicable, a Canadian dollar to US dollar exchange rate of 0.774 was used. No share purchase warrants are being provided in the conversions.
The sum of the transactions results in a net decrease in liabilities of approximately $5,254,000, including a net decrease in current liabilities of approximately $2,584,000. A total of 27,152,226 common shares of UGE will be issued in the transactions, including 13,251,200 which were issued on September 28, 2018, and 13,901,026 that are pending final approval, as noted above.
One of the loans converted was formerly a CAD$2,400,000 loan from the M.H. Brigham Foundation, due on demand. In exchange for this loan, a new CAD$750,000 three-year loan was issued, paying quarterly interest of 8% per annum. The remaining CAD$1,741,123, which includes accrued interest, was converted to common shares of UGE.
Two of the loans being converted are ones that were issued in UGE's divestment of its former wind subsidiaries in 2016. The two loans were for $1,000,000 and $2,600,000. The smaller loan, along with accrued interest, has been converted to common shares as of September 28, 2018. In exchange for the larger loan, a new $350,000 loan will be issued, paying quarterly interest of 8% per annum over a three-year term. The remaining $2,689,848, which includes accrued interest, will be converted to shares of UGE once final approval is granted by the Exchange.
The five accounts payable totaled $47,306 and were converted in full to common shares of UGE.
As of Friday, September 28, 2018, the seven transactions that have been completed, as described above, decrease liabilities by $2,564,107. The remaining conversion, once approved, will decrease liabilities by the remaining $2,689,848, resulting in a total decrease in liabilities of approximately $5,254,000.
"We are pleased to have received such a strong vote of confidence from our partners," said Nick Blitterswyk, CEO of UGE. "Our second quarter 2018 results did not meet our goals, but we are confident that we have made the necessary adjustments to be a significant player in the fast-growing commercial solar sector for many years to come. These transactions significantly improve our balance sheet and overall financial position, putting us in a stronger and more flexible position as we continue to target additional growth opportunities."
Status of Previously Announced Equity Financing
The Company also announces that the equity financing announced by press release on July 30, 2018 has been cancelled. The Company believes that the conversion transactions announced today are a significant step forward in helping the Company achieve its goals and continues to consider alternative financing options. In addition, since the release of the Company's second quarter results, selling, general and administrative expenses have been cut by approximately 15%.
Exercise of Special Warrants
The Company would like to announce that Xiangrong Xie, a member of UGE's board of directors and a Control Person of the Company, has exercised 2,000,000 Special Warrants for 2,000,000 common shares of UGE. The Special Warrants were acquired in connection with UGE's Qualifying Transaction on July 28, 2014, with each Special Warrant exercisable for one common share for no additional consideration. After the exercise there are 3,100,000 Special Warrants remaining, held by the founders of the Company, Nicolas Blitterswyk, Yun Liu, and Xiangrong Xie.
UGE delivers immediate savings to businesses through the low cost of solar energy. We help commercial and industrial clients become more competitive by providing distributed renewable energy solutions at no upfront cost, generating long-term economic and environmental returns. With over 370 MW of global experience, we work daily to power a more sustainable world. Visit us at www.ugei.com.
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